NATIONALLY RECOGNIZED FEDERAL LAWYERS
How serious is hiding cash income?
|Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek – with over 40 years of combined experience handling federal criminal defense cases that others won’t touch. You’re reading this because you’re worried about unreported cash income, someone you know is hiding income from the IRS, or you’re already being investigated. Hiding cash income isn’t just a tax problem – it’s a federal crime that sends people to prison every month.
This article covers what happens when the IRS catches you hiding cash, the criminal penalties you’re facing, how federal prosecutors build these cases in 2025, and why the “everyone does it” mentality destroys lives. We’ve represented clients in high-stakes federal cases – the Anna Delvey Netflix series, the Ghislaine Maxwell juror misconduct matter, complex fraud schemes. Tax evasion cases are just as serious, just as life-changing.
You’re Looking at Federal Prison Time
Tax evasion under 26 U.S.C. § 7201 carries up to five years in federal prison. That’s not probation. That’s not house arrest. Federal prison – where you’re away from your family, your business collapses, your reputation is destroyed permanently. In fiscal year 2024, the average sentence for tax fraud was 15 months according to the U.S. Sentencing Commission. Some defendants got more – a Pennsylvania business owner received 24 months in September 2024 for hiding assets and filing false financial disclosures.
The fine is $100,000 for individuals, $500,000 for corporations. But that’s just the criminal penalty. Civil penalties add another 75% fraud penalty on top of the taxes you owe. A New Hampshire woman who ran a home health care business reported $35,000 in income when she actually made nearly $1.7 million between 2018-2020. She pleaded guilty in September 2025 – facing prison time plus back taxes, penalties, interest that will follow her forever.
Federal judges don’t care that you needed the money to keep your business afloat. They don’t care that other people in your industry do the same thing. They care that you knowingly, willfully broke federal law.
How the IRS Catches You
The IRS doesn’t randomly stumble onto cash income schemes. In 2025 their enforcement capabilities are stronger than ever thanks to new funding from the Inflation Reduction Act. More auditors. Better technology. Expanded focus on cash businesses, pass-through entities, high-income taxpayers.
Banks report cash deposits over $10,000 through Currency Transaction Reports. If you’re structuring transactions – breaking up deposits to stay under $10,000 – that’s a separate federal crime and banks file Suspicious Activity Reports that go straight to IRS Criminal Investigation. Between 2022-2024, IRS-CI uncovered $21.1 billion in tax fraud using Bank Secrecy Act data.
Informants turn you in. Disgruntled employees, ex-business partners, former spouses – they know you’re paying workers cash under the table. The IRS pays whistleblower rewards up to 30% of what they collect. Your competitor calls the IRS because you’re undercutting prices by avoiding payroll taxes.
Audits reveal patterns. When your lifestyle doesn’t match your reported income, the IRS notices. They subpoena bank records, credit card statements, mortgage documents.
Industries the IRS Targets in 2025
Cash-intensive businesses face heightened scrutiny. Restaurants and bars top the list – a New Jersey fast-food restaurant owner pleaded guilty in August 2025 to a $1.2 million tax fraud scheme involving unreported cash wages. Construction companies face similar problems – three Orlando residents pleaded guilty in April 2025 to payroll tax evasion schemes.
Healthcare businesses – the home health care owner who hid $1.7 million used an under-the-table cash payroll. She hired caregivers, paid them cash, reported almost nothing. She thought nobody would notice because she didn’t deposit the money. Wrong. The IRS reconstructed her income through third-party records.
The IRS focuses enforcement on business owners who collect payroll taxes from employees but don’t pay them to the government – that’s considered theft from the U.S. Treasury and prosecutors are ruthless about these cases.
The “Everyone Does It” Trap
Maybe everyone in your industry under-reports cash income. Maybe your accountant suggested it. Maybe you’ve been doing it for years. That doesn’t protect you when the IRS comes knocking – and they’re coming more often in 2025.
The owner of Yoga to the People brought in millions from 2012-2020, didn’t file individual or business tax returns for at least eight years, only accepted cash payments. October 2024 – forced to pay over $2.5 million in restitution. His defense was probably that this is how yoga studios operate. Federal prosecutors didn’t care.
Criminal prosecution for tax evasion requires willfulness – you knew you owed taxes and deliberately avoided paying. “I didn’t know” doesn’t work when you’re running a business, collecting cash, and not reporting it. Not keeping records is willful.
Less than 2% of taxpayers face criminal investigation annually, but once you’re in that 2%, your odds of prosecution are high. IRS Criminal Investigation had a 90.6% conviction rate in recent years – they don’t bring weak cases.
What Happens After You’re Caught
You’ll face both criminal prosecution and civil tax assessment. Criminal case comes first – charges, arraignment, possibly detention if the amounts are large. If you plead guilty or go to trial and lose, you’re sentenced based on federal guidelines that consider the tax loss amount, whether you used sophisticated means to conceal income, your criminal history.
Even after serving prison time, you owe the taxes plus interest plus penalties. The IRS can seize assets, garnish wages, put liens on property. Your professional licenses may be revoked. You’re a convicted felon – employment prospects collapse, your family pays the price for years.
At Spodek Law Group – we’ve seen federal tax cases destroy people who thought they were just cutting corners to survive. All of them ended up in federal court facing prison time.
What You Should Do Right Now
If you’re currently unreporting cash income – voluntary disclosure through the IRS is an option before criminal investigation begins. Once Criminal Investigation is involved, it’s too late. Stop the conduct immediately, consult with a federal criminal defense attorney before approaching the IRS.
If you’re under investigation – do not talk to IRS agents without an attorney present. Anything you say will be used to build the criminal case against you. We have former prosecutors at Spodek Law Group who understand exactly how the government builds tax evasion cases.
Why This Matters Right Now in 2025
IRS enforcement is ramping up significantly. The agency is hiring more auditors, targeting cash businesses, using better technology to detect unreported income. They’re focusing on taxpayers with over $250,000 in tax debt and those with estimated unreported income over $400,000 – but smaller cases get prosecuted too.
2025 is not the time to assume you’ll fly under the radar. Criminal Investigation publishes press releases monthly – restaurant owners, construction companies, healthcare providers. All of them are convicted felons now.
If you’ve been hiding cash income – take it seriously. If you’re under investigation – you need representation immediately. At Spodek Law Group, we represent clients facing federal charges nationwide – available 24/7. We’ve handled cases involving millions of dollars, complex schemes, clients whose lives were on the line. Hiding cash income lands people in federal prison.